Tag Archives: financial ponzi schemes

Jun 16 2016

Wayne Swan Rewrites History to Support Living Off of Other People’s Money


Armstrong Economics Blog

Re-Posted Jun 16, 2016 by Martin Armstrong

USA GDP 1960 - 2012

It is truly amazing how biased socialists are to the point that they just want to rob anyone who has more than they do and rewrite history to further their political agenda. Wayne Swan, former deputy prime minister of Australia, wrote a political piece for the Guardian that is total rubbish with the heading: “Cutting corporate tax won’t create jobs. It’s yesterday’s solution to our problems.” Swan boldly proclaims that the tax reductions of Reagan and Thatcher did nothing.

Here is the real economic growth of the USA since 1960. You will notice a sharp rally when Reagan cut the taxes. In fact, Reagan created more jobs and revenue by lowering taxes. The pretend “trickle-down economics” these people hate so much actually worked. Obama raised taxes, and he will go down in history for having the lowest economic growth rate of any American president.

Facts and evidence do not matter to socialists. They always support their ideas with fiction to justify robbing other people’s money

Jun 15 2016

Is the Fed Losing Credibility?


Armstrong Economics Blog

Re-Posted Jun 15, 2016 by Martin Armstrong

Indecisive

The Federal Reserve pushed back its plans to raise its benchmark short-term interest rate, which was widely expected following the jobs report previously. Yet this was not a credible day for the Fed in the least as they are starting to appear to be confused and skitzofrantic. Fed credibility is beginning to create a crisis behind the scenes generating doubts about monetary policy moving forward. The Fed’s monetary policy appears ai9mlessly wondering trying to figure out what to do with conflicting problems on both side of the dividing line. It’s not clear that the Fed has a grip on any theory and is revealing that those at the top perceived with so much power, are helplessly a drift in a ship without sails, rigging, a rudder, or an engine.

Fed Velocity of Money May 1 2016

Fed Excess ReservesConsequently, after a two-day policy meeting, the Federal Open Market Committee emerged unanimously voting to hold the federal funds rate between 0.25% and 0.50%, that they are paying banks to hoard cash in excessive reserves. They are in bed with the bankers who tell them then need a place to park money without risk. The entire idea of quantitative easing was to inject cash to “stimulate” the economy. But that policy never achieved its goal and the US economy bounced back, but it was a dead-cat bounce. This has been the worse recovery in Post-Depression history because they have paid bankers not to lend money. Paying bankers .50% to hoard money has caused the velocity of money to collapse altogether. European banks are shipping cash to that States and parking it at the Fed to achieve that same riskless trade.

The Fed cannot break free of the bankers to see what they are actually doing is not stimulating the economy, but causing it to contract.

Here we have the Dow electing our Daily Bearish Reversal and Gold electing a Daily Bullish Reversal all because they FAILED to show the world they have this under control. Yet this reaction from the markets is terribly interesting. The Dow declines because the Fed DID NOT RAISE RATES, and gold rallies for the same reason. This is counter-trend to the general “fundamental” expectations.  The Dow was doing well with the prospect of a rate hike until the jobs report and it rallied but stopped dead with the Weekly Bullish Reversal at 17800. Gold crashed but held our critical Bearish Reversal at 1206 and bounced. While the gold crowd thinks a rally is good because the market will crash, at the same time we have the Dow declining with lower rates instead of higher rates. These trends are showing extreme stress in the financial markets overall.

Jun 15 2016

Department of Labor Changes Interpretation of Act to Raise Minimum Wages


Armstrong Economics Blog

Re-Posted Jun 15, 2016 by Martin Armstrong

Dept-Labor
The U.S. Department of Labor, acting on a directive of President Obama issued back in March 2014, has announced changes in the Fair Labor Standards Act (FLSA). Beginning this fall, the act will basically double the amount of money workers must make to be exempt from federal overtime pay requirements. Essentially, employees with gross salaries under $45,000 who work more than 40 hours a week must be paid overtime.

Obama could not increase the minimum wage rate through Congress, so he instructed the Labor Department to do it through the backdoor. This will definitely kill jobs and cut hours to ensure employees do not exceed 40 hours. A $15 an hour job for 40 hours comes in at $31,200 annually. By raising the threshold, Obama has more likely than not created an incentive not to hire full-time workers. This is what we get when someone has no idea of how the real world works.

Jun 13 2016

BREXIT Polls at 55% – Will the Euro Crash & Burn?


Armstrong Economics Blog

Re-Posted Jun 13, 2016 by Martin Armstrong

British GDP Growth since 1949

Euro HangingWe provided this chart in our BREXIT Report which says it all. For all the scare mongering how Britain will be worse off if it leaves the EU, this chart demonstrates how the politicians are lying. Britain has seen only declining economic growth since it joined the EU and these are the British government’s own numbers.

Caution will be necessary. If Britain leaves and they cannot cover up that much against the EU, then the pound will survive and the Euro will witness a contagion begin as other states will be driven to hold referendums.

What nobody wants to talk about in the press is how Merkel’s decision to let in the refugees was unilateral. She has fought for the federalization of Europe, but went and made a decides that binds everyone. Girls are being raped in Sweden and Germany. This whole this is a real crisis. Calling those against it racists just demonstrates how abusive these politicians are to defend their mistakes. The refugees are not a race, it is a religion.

Jun 9 2016

Saudi Arabia Banning Short Selling Against the Currency Peg


Armstrong Economics Blog

Re-Posted Jun 8, 2016 by Martin Armstrong

Saudi Arabia Flag

Saudi Arabia has banned financial products that amount to a short-position against the rial. The measure indicates high degree to which the peg is starting to come under attack. The government has announced a wave of layoffs in the public sector. This is an absolute first. The Middle East was considered beyond economics because of oil. Everything is changing.

We will see the same situation with respect to the Euro. If Britain does not leave the EU, it will stand in silence and what its financial standing in the world collapse. Brussels will adopt the same type of policies and just make it illegal to disagree with their policies.

Jun 8 2016

Innovation — Unemployment — Business Cycle


Armstrong Economics Blog

Re-Posted Jun 8, 2016 by Martin Armstrong

CAPITALISM

QUESTION:

Hi Martin,

Thank you for everything that you do.

Comments have been made – to which you yourself have been alluding to for some time – that technology is replacing jobs at such a rapid rate, unemployment will be a major issue in the very near future.  However, these commentators conclude that this proves that capitalism has failed.

Obviously, since capitalism has been interfered with for decades, it can’t have failed since it has not been allowed to be practiced unfettered.

My question is, if we were living in a capitalist system without intervention, how would the system correct itself?  What I mean is since corporate profits depend upon consumption, and consumption depends upon wages from the masses, then how would capitalism prevent very high unemployment?  (This goes back to your example of Henry Ford providing higher wages to his employees, so they could buy the cars he was producing.)

Thank you in advance for any insight you can provide on this very critical issue.

Danny

ANSWER: People who claim that capitalism has failed are seriously burdened with propaganda. Capitalism is freedom, and socialism is effectively the lack of freedom. True, we have done nothing but interfere with the economy since the theories of Marx and Keynes were adopted. Yet, Paul Volcker admitted that this “New Economics” has failed. This whole theory was based on the idea that government could manipulate society to produce utopia, but they have never been able to achieve that. Larry Summers has admitted that publicly, but the socialists do not listen because they want to rob their neighbors.

Innovation comes in waves and technological advancements always displace jobs. The problem has been that people do not improve their worth, yet they demand pay hikes just because they want more money. If you go to Miami, the number one language is Spanish. They want to raise the minimum wage to $15 instead of encouraging people to learn English to broaden their worth. Anyone who has computer skills starts at $15+. So why should people without employable skills earn the same as a person with technology skills?

I had a friend who was a pilot during the Korean War. He told me that many of the old pilots could not make the transition when the new jets came in because they were unable to respond as quickly to the increased speed. Every field moves through the same advancement curve. Unions attempt to freeze skills by demanding more money rather than teaching people to adapt and move with the cycle.

The system will always correct itself as it has done throughout history, long before Marx/Keynes. It is always subject to the business cycle, which is influenced by many factors including weather. Capitalism began with the Black Death. Before then, it was a highly socialistic world or serfs. You worked the land and kept 20% of the food in return for a house to live in, and you could run into the castle when danger came. The Black Death killed about 50% of the workforce and the scarcity of labor resulted in landlords being willing to pay wages. The shortage of labor gave birth to capitalism. So, there will always be cycles to the economy.

Romans invented corporations. They bought and sold shares in the marketplace, and that freedom of capital created Rome (not centralized planning). The system has always been self-correcting. Technology will advance, which will displace jobs and cause unemployment to rise. In turn, corporate profits will be brought down and war will typically emerge to thin the herd. Eventually, the next generation becomes better equipped to ride the next wave of innovation.

Jun 4 2016

Claude Frédéric Bastiat – The Father of Libertarianism


Armstrong Economics Blog

Re-Posted Jun 4, 2016 by Martin Armstrong

Bastiat Claude Frédéric (1801 – 1850)

Claude Frédéric Bastiat (b. 1801-1850) was a French, classical liberal theorist, political economist, Freemason, and member of the French National Assembly whose fundamental ideas have provided a foundation for libertarianism. In economics, Bastiat is remembered for his concept of opportunity cost and for introducing the parable of the broken window or the “glazier’s fallacy.” Essentially, a boy breaks a pane of glass in a shopkeeper’s store. The owner gets angry for it will cost him six francs. The argument is that this is good for the economy, for now the glazier profits by installing a new pane of glass, thereby increasing the flow of money within the system. Thus, the linear conclusion is to go around and break all the windows in town to stimulate the economy. But what if the glazier paid the boy to go break windows in town? Then it becomes fraud.

Hiroshima, 1945

Bastiat argued that there was an opportunity cost that was not being viewed. The six francs the shopkeeper must spend on the pane of glass may have been spent in a completely different sector to stimulate that part of the economy. Some have taken the “glazier’s fallacy” and applied it to war. Granted, war is seen as good for the economy for it reduces unemployment (and population) and compels defense spending.

The Invisible Hand entered and compelled developments in weaponry, such as the creation of nuclear weapons. True, nuclear blasts ended the war in the Pacific. However, it is also true that further development led to nuclear energy for power. The opportunity cost cannot be determined so easily because the question of nuclear energy could have taken perhaps 10 to 20 more years to develop, yet it would have been possible to do so without war.

Bastiat proposition of the “glazier’s fallacy” showed that we could create all sorts of innovation, reduce population excess, and create full employment by just going to war with everyone, everywhere, just like the glazier who hires the boy to break all the windows in town. Does this really produce economic stimulus or is it merely diverting resources and destroying opportunity in other areas?

Tractor

Governments create public works as their first move to stimulate the economy, but that is the mirror image of destroying everything. Fine, we can create bridges and roads few people travel on, but this comes at the price of diverting resources that would have created better economic stimulus through other, more permanent economic areas. Once the building, bridge, or road is finished, the workers have no permanent job. Such stimulation rarely stimulates the economy.

Roosevelt’s WPA worked, not for stimulation reasons, but because there was a shift in employment with the combustion engine displacing people from jobs in agriculture. Moving from horses to tractors in 1925 set in motion a major decline in employment, which the dust bowl took to a whole new level.

terminator-R

What will technology shifts do today? Unemployment is rising in the lower job markets where robots can replace such tasks. With robots, there are no pensions, health benefits, or people like Hillary yelling to raise the minimum wage to $15, which would only hasten the shift by raising unemployment sharply. As for war, government is already working hard to replace soldiers with robots.

The danger of this advancement to robots is that governments will use them as police and they need not worry about the loyalty of the troops. Revolution typically unfolds when the military turns against their master. The best way to prevent that is to eliminate humanity in the police force.

Bastiat’s “glazier’s fallacy” is still relevant today. The reason why is rather simple. We live and function according to a bell curve. Anything to excess destroys the host. Yes, breaking one pane of glass does not alter the entire economy. However, if the glazier paid the boy to go break all the windows in town, all other segments within the economy would suffer.

Everything within reason, yet government is never reasonable.

May 31 2016

The Numbers


Armstrong Economics Blog

Posted May 31, 2016 by Martin Armstrong

Reversals Timing

QUESTION: Marty; your numbers are just incredible. Your number 17800 I thought would be elected. The Dow was above it and looked like it was preparing to take off. To watch this market fall back yet close just below it is amazing. Regardless of the market, it will always gravitate toward your numbers like magnets or some compelling invisible force. Since we avoided the buy signal in the Dow for the month, what now?

ANSWER: I understand that many people hate my guts because the numbers are the numbers. I have even had to endure allegations of manipulating the world economy because of the accuracy of these Reversal numbers. These same people refuse to accept the possibility that markets are just not random and are extremely precise in their movement. That means they cannot be manipulated long-term changing their trend nor can government proclaim vote for so-and-so and he will change everything. That is what we are really talking about here. It is much deeper than simply failed to close above 17800 in the Dow. The implications are highly profound. This is why Brussels will collapse as well and why Western Civilization will lose the crown of the Financial Capital of the world. The more they fight the trend, the bigger the fall. Japan promised to support the NIKKEI when it began to crash. People held looking to government to save them. We ended up having to bailout almost 300 major companies in Japan because of their wrongly placed faith in government as so many do today. Nothing can be manipulated to save society or to compel its destruction. That is what our Reversal System has proven for decades.

The next big turning point in the Dow will be September. We will put out a special report because this is becoming very interesting and extremely important.

May 31 2016

Bankers Forced out of Metals?


Armstrong Economics Blog

Re-Posted May 31, 2016 by Martin Armstrong

Manipulation-2

QUESTION: Mr. Armstrong; I have been trapped by these gold promoters and they indeed are like used car salesmen, worse since they are not regulated. I listened how they were wrong because the bankers were suppressing gold. If the bankers were eliminated, gold would soar to anything like $25,000 to $100,000. Well, the bankers have all been skewered. Here in Canada, Bank of Nova Scotia is one of the five banks accused in manipulating metals. One would think if the bankers were really preventing the metals from rallying, then why are they collapsing? I suspect you are the only person telling the truth here. Can you explain the real story?

Thank you

PH

ANSWER: Bankers have always fun-run their clients. It is way too tempting to do so when you make the market and you can see the client positions. The big traders are starting to wise up. They are a bit slow. You have to excuse them. Perhaps they were in the special-ed classes growing up. They trusted the big names and are starting to experience being screwed big time. The total gold bullion trade has averaged 4,000 tons annually for the past 10 years. One metric ton equals 32,150.7466 troy ounces. So we are talking about 128,600,000 ounces per year. The US Mint sells about 425,000 one ounce coins. This tend to put the bullion coins in perspective.

About two-thirds is new mine production and one-third is recycled gold according to the World Gold Council. Jewelry accounts for about 50% of gold sales. About 9% of gold production is used in technology. Central Bank demand has fluctuated from 2% to 14% annually of total production. Including ETFs, investment demand accounts for about 33% of world production. This means you have a fresh supply every year of 128,600,000 ounces coming to the market. This is not all “investment”. If the retail trade in the economy slows, jewelry sales decline. That is the bulk of gold but the promoters want to make you think gold is suppressed solely by the bankers for nefarious reasons. There are other factors taking place. This is not all “investment” consumption.
93SilverBuffett-WThis type of “manipulation” pushing the fix one way or the other to elect stops has been like growing money on trees. This BY NO MEANS suppresses gold or any currency, no less any other commodity that they have played games with. All the big manipulations have ALWAYS been to the UPSIDE, not to the downside. It is absurd to pretend that gold is suppressed perpetually so they can make money in some strange way. Both of the Buffet entries into silver were to push it up. Even GATA knew that was the game in silver back then. Did they tell everyone it was PhiBro & Buffet? Why not?

SilverManipulationThe bankers get it going from $3 to $7 and and then the promoters talk it up and the retail come in to buy the high every time and they turn around and sell it to them. That is how they make real money. Suppressing gold to keep in down with no volume means no profit. Even the manipulation of Platinum was the the UPSIDE.

Now that the bankers are being forced out of the game, gold was actually being supported by them. They were keeping the hope of a rally alive. Without the bankers, the support will be less and we can see gold fall out of bed. It has fallen to $1201 by 5PM on May 30th. The next support does not come into play until 1170.

Every market has its time and place. The promoters hate my guts because they always want to make a profit getting people to buy. They could care less about the advice they are giving. The market is always right. People are wrong. We can define the levels and the time. Just let the market do its thing.

May 27 2016

India Joining Cashless Society – Pulling the Plug on Govt.


Armstrong Economics Blog

Re-Posted May 27, 2016 by Martin Armstrong

Pulling Plug Gov

COMMENT: it is just chaos by politicians destroying the future. cashless society …how did u see this just amazing.I never thought it is coming to india as indians believed in hard MONEY sir.
thank you for your knowledge i think in future u should create an AI to help the people show the path. Coz there is no other way to see this except CYCLES.

We end up making same mistake over and over again.
G20 Photo

Prime Minister Narendra ModiREPLY: All governments talk. Indian Prime Minister Narendra Modi is now saying that a cashless society will end black money. He is on par with the rest of the political world. The prospect of a cashless society was discussed at the last G20 meeting. They want to eliminate cash worldwide and shut down tax havens. When you have actually worked behind the curtain, you come to realize how things really work. Those who make up conspiracy theories are usually biased. For decades, I have been told in meetings with many governments around the world that IF PEOPLE PAID THEIR TAXES THEY WOULD HAVE NO PROBLEM RUNNING SOCIETY. This has been told to be so many times; it is the prayer they say at the foot of their bed before they go to sleep every night.

There really is nothing new from what they are doing now and the fall of the Roman Empire. The human emotions are the same. This is the ONLY reason I am doing what I am doing. If I acted only for myself, I would run to an island and trade from the beach. But I realize that government is like water in a bathtub. There will be no place to hide. History teaches us that. So the question becomes, how fast will this be over? I follow our models. Once the plug is pulled, everything will go down the drain very rapidly. We spend tens of millions of dollars recreating the world monetary system to answer the question: how fast do governments die?

Roman decline silver content monetary system - Armstrong Waterfall effect

Look at this chart of the fall of the Roman monetary system. The Persians captured Valerian I in 260 AD. His son Gallienus took over and the economy went into a massive wave of deflation after the people came to the realization that they were vulnerable and began to hoard money. As people hoard, as they are doing right now on a personal, corporate, and bank level (see Fed excess reserves), the economy turns down and that results in less tax revenue. Before, they debased the money for that was the means to increase the money supply to meet expenses. The bottom in the debasement unfolded in 268 AD. So while Rome lasted over 1,000 years, its monetary system collapsed in just 8.6 years. That was without internet, radio, or TV for communication.

Fed Excess Reserves

Those in power really do see us as the great unwashed who are clueless and hopeless without them. They fight against the invisible hand all the time, and they want to rule the world. I have met with many heads of state over the years. They all know about our computer. They always seem to want to know what it is saying. It is not that they follow it, but rather they call to keep an ear to the ground to see who is winning this eternal contest between the rulers and the great unwashed.